Keurig Dr Pepper upgraded at Barclays as breakup plan gains clarity

Investing.com -- Barclays upgraded Keurig Dr Pepper to Overweight from Equal Weight and raised its price target to $36 from $30, arguing that improved leverage, reduced transaction uncertainty, and greater visibility around the company's planned separation have created a more attractive risk-reward profile.

The broker sees the stock as a rare valuation opportunity within the consumer staples sector, with potential upside as investors reassess the company's fundamentals ahead of the planned split.

The brokerage said several investor concerns that emerged following the acquisition of JDE Peet’s and the subsequent separation plan have eased over the past nine months. Management has clarified financing arrangements, separation mechanics, and governance issues, helping de-risk the transaction and improve confidence in the company's strategic direction.

Barclays noted that while execution risks remain, including integration work, separation preparations, and the search for a new chief executive for the future Global Coffee Co., the company continues to offer one of the strongest growth profiles in its coverage universe. The firm believes the strategic rationale behind creating separate beverage and coffee businesses remains intact.

The broker's sum-of-the-parts analysis suggests the shares are undervalued. Its EV/EBITDA-based valuation implies an equity value of roughly $35 per share, while a P/E-based framework points to approximately $37 per share, both above the stock's recent trading level of $30.87.

Barclays expects the standalone Beverage Co. to benefit from its position as a pure-play liquid refreshment beverage company, while Global Coffee Co. would gain scale and diversification through the combination of Keurig and JDE Peet’s assets. The broker believes the coffee business, despite investor skepticism, will emerge as one of the world's largest coffee platforms with exposure across formats and geographies.

Barclays maintained its earnings forecasts, projecting adjusted EPS of $2.30 for 2026 and $2.52 for 2027, while highlighting opportunities from revenue synergies, digital marketing initiatives, and a three-year $400 million synergy program tied to the JDE Peet’s integration.

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